"Net 30" and "freight collect" sound like they belong in the same conversation, but they answer two completely different questions. One is about timing: how many days after an invoice does a customer have to pay it. The other is about allocation: which party, shipper or consignee, is on the hook for the carrier's bill in the first place, and who therefore controls release of the cargo. Our guide to freight payment terms, prepaid vs collect covers the second question: who pays and who holds the leverage over the goods. This post covers the first one: once you have issued an invoice, how long do you have to wait for the money, and what does that waiting period do to your own cash position as a forwarder. The two are easy to blur because both get shortened to "payment terms" in everyday conversation, but a shipment can be booked freight prepaid and still be billed to the shipper on net 60, or booked freight collect and billed to the consignee on net 30. They are independent variables.
What net 30, 60 and 90 actually mean
A net term states how many days a customer has to pay an invoice in full, and the clock conventionally starts on the invoice date, not the shipment date and not the delivery date. Net 30 means payment is due 30 calendar days after the invoice was issued; net 60 and net 90 extend that to 60 and 90 days. Industry explainers are consistent on this point: payment is typically due 30 calendar days after the invoice date, counting weekends and holidays unless the contract says otherwise.
That "unless the contract says otherwise" is where real disputes start. Some businesses anchor the term to a different event instead, such as the date goods shipped, the date they were delivered, or the date they were accepted by the buyer, and if that start date is not written down clearly in the contract and on the invoice itself, both sides can end up counting from a different day without realising it until a payment looks late that the customer believes is not. The practical fix is unglamorous but effective: state the start date in words on every invoice and in the credit terms letter, not just the number of days.
| Term | Days to pay, from invoice date | Who typically asks for it |
|---|---|---|
| Net 30 | 30 days | Default in most B2B freight billing |
| Net 60 | 60 days | Larger shippers with their own long payment cycles |
| Net 90 | 90 days | Large corporates and some government or institutional accounts |
Why the gap is a forwarder problem, not just a shipper preference
A large shipper asking for net 60 or net 90 is usually optimising its own working capital: the longer it holds cash before paying suppliers, the more it can do with that cash in the meantime. That is a rational, common negotiating position, and a forwarder chasing volume from a major account will often concede it. The problem is that very little of what a forwarder owes upstream runs on anything close to those terms.
Air cargo is the clearest documented example. Freight forwarders and agents settle with airlines through IATA's Cargo Accounts Settlement System (CASS), which IATA describes as a standardised billing and settlement framework connecting airlines, general sales and service agents, and freight forwarders across more than 90 countries. Settlement runs on fixed, short billing cycles rather than an open-ended account: a forwarder's agreed charges for a billing period are totalled and the forwarder remits the amount due to the settlement system, which in turn pays each airline, on a schedule measured in days and weeks, not months. However generous the terms a forwarder extends to its own customer, the airline side of that same shipment is not waiting on a 60 or 90-day clock.
Ocean freight follows a similar logic even without a single global clearing system behind it. Carriers routinely tie release of the bill of lading, or release of the cargo itself at destination, to payment of the freight charges rather than to any separate credit period, particularly on freight collect moves. The practical effect is the same whichever mode is involved: a forwarder can be fully on the hook to a carrier within days of a shipment moving, while still waiting weeks or months to collect the matching invoice from its own customer. That mismatch, not the headline rate a shipper negotiates, is the actual cash flow risk.
Days Sales Outstanding: putting a number on the gap
Days Sales Outstanding (DSO) is the standard way to measure how long, on average, it actually takes to collect cash after a sale is invoiced. The Corporate Finance Institute states the formula as accounts receivable divided by net credit sales, multiplied by the number of days in the period being measured. Applied over a year, that is: DSO = (Accounts Receivable / Net Credit Sales) x 365.
The number matters because of what it is telling you, not because of how it compares to some published industry average. A lower DSO means cash is coming in close to when you expect it, so operating costs such as carrier payments, staff and rent are easier to cover without drawing on a credit line. A rising DSO means more of your revenue is sitting as an unpaid balance on a customer's books rather than cash in yours, and for a smaller forwarding business that relies on prompt collection to fund its own upstream payments, that is exactly the squeeze described above showing up in the numbers. As our own guide to freight forwarder KPIs sets out, there is no credible, sourced industry benchmark for what a "normal" DSO looks like in freight forwarding specifically, so the only reliable comparison is your own trend over time: is DSO rising or falling against your own baseline, not against a number someone else quotes without a source.
Tools for managing the gap, in brief
Once the gap between what you owe upstream and what you are owed downstream is visible, there are established tools for funding it rather than absorbing it out of working capital. This post is the terms-101 piece behind two others that go deeper on each tool, so we will not repeat them here. Freight factoring for forwarders covers selling an unpaid invoice to a finance company for cash today, approved on your customer's credit rather than yours, plus what it typically costs and the fraud pattern now intersecting with it. Trade credit insurance and credit control for freight forwarders covers insuring against a customer's default and the broader discipline of managing who you extend credit to in the first place. Both assume you already understand what a net term is and why it creates exposure; this post is that prerequisite.
What to put in a credit application or terms letter
Before offering net terms to a new customer, put the agreement in writing rather than letting it default to whatever the customer assumes. At minimum, a credit application or terms letter should state:
- A specific credit limit. A cap on how much can be outstanding at once, reviewed periodically rather than left open-ended. A new customer with no payment history is reasonably started on a lower limit and increased once a track record of on-time payment exists.
- The exact start date for the term. Spell out that the clock runs from the invoice date, in words, on both the agreement and the invoice itself, precisely because that is the detail most likely to be assumed differently by each side otherwise.
- A late-payment interest clause, where your jurisdiction allows one. In the UK, for example, the Late Payment of Commercial Debts (Interest) Act 1998 sets a statutory interest rate of 8 per cent over the Bank of England's official dealing rate for qualifying business-to-business contracts, and that statutory right applies whether or not the contract mentions it. In jurisdictions with no equivalent default statute, such as the United States, a late-payment interest rate has to be written into the contract to be enforceable at all, and it is still subject to the state's own usury limits. Check what applies where your customer is based rather than assuming one country's rule travels.
Writing the clause in is only half the job. A late-payment interest clause is only as good as your actual willingness, and practical ability, to enforce it against a customer you presumably want to keep doing business with. Many forwarders write the clause in as a deterrent and rarely invoke it, which is a legitimate choice, but it should be a deliberate one rather than an assumption that the clause alone does the work.
Extending terms is a concession, not a favour
It is worth saying plainly: agreeing to net 60 or net 90 instead of net 30 is a real commercial concession, with a real cost, not a courtesy you are extending for free. You are effectively financing your customer's working capital with your own, for the length of the extra term, on top of whatever you are already financing between paying the carrier and collecting the invoice. That cost does not show up as a separate line item anywhere, which is exactly why it gets given away too easily under pressure from a large account. Price it in, whether through the margin on that account, a shorter term for a smaller or newer customer, or a deliberate decision to fund the gap through factoring rather than through your own reserves, rather than treating a longer term as something that costs nothing because no invoice says it does.
What to do next
- Write the start date of your payment term into every contract and invoice in words, not just as a number of days.
- Map out, for your own business, roughly how fast your upstream costs (carrier and airline payments) come due against how long your own customers take to pay, so the gap is a number you track rather than a feeling you have.
- Decide, in advance and in writing, what credit limit and late-payment terms you will offer a new customer before the first invoice goes out, not after the first one goes unpaid.
- Track your own DSO over time rather than against an unsourced industry figure, and treat a rising trend as the early signal it is.
Managing the gap between being paid and being owed is part of running a forwarding business at any size. If you are looking for shippers to quote, more than 29,300 logistics companies are searchable by country and service in the CargoLinked directory, and the public requests board lists freight that shippers have posted for forwarders to quote on directly.
This article explains general commercial and accounting concepts and is not legal, tax or financial advice. Confirm current statutory interest rates and usury limits for your own jurisdiction, and the actual settlement terms in your own carrier or GSA agreements, before relying on any figure here.
